The top story on Employment Law This Week: Casino trainees could be entitled to minimum wage.

The U.S. Court of Appeals for the Fourth Circuit recently revived a class action suit from a group of trainees at a casino in Maryland. Applicants who wanted to work the casino’s new table games were expected to attend

Our colleague Michael Kun, attorney at Epstein Becker Green, has a post on the Wage & Hour Defense Blog that will be of interest to many of our readers in the hospitality industry: “Clarification of California’s Obscure ‘Suitable Seating’ Wage Rule Likely to Lead to More Employers Providing Seats – and to More

Our colleague Michael S. Kun, a Member of the Firm at Epstein Becker Green, has a post on the Wage and Hour Defense Blog that will be of interest to many of our readers in the hospitality industry: Taco Bell Employees Likely Are Not Celebrating Their ‘Victory’ in California Meal and Rest Period

By Marisa S. Ratinoff and Amy B. Messigian

One of the main battlegrounds between employers and employees relates to the ability of employers to preclude class actions by way of arbitration agreements containing class action waivers. In California, the seminal case of Gentry v. Superior Court (“Gentry”) has had the practical effect of

By Michael Kun

Several years ago, employees in California began filing class action lawsuits against their employers alleging violations of the “suitable seating” provision buried in the state’s Wage Orders.  The unique provision requires some employers to provide “suitable seating” to some employees when the “nature of their work” would “reasonably permit it.” 

The use

By:  Kara Maciel, Adam Solander and Lindsay Smith

As the Employer Mandate compliance deadline looms for employers under the Affordable Care Act (“ACA”) and employers are closely monitoring employee hours, it is critical that employers take appropriate and lawful steps to record all hours worked by an employee.  If employers try to play games and manipulate how time records are maintained, they could find themselves in hot water under both the ACA and the Fair Labor Standards Act (“FLSA”). 

In what appears to be one of the first lawsuits challenging how hours are recorded under the ACA, an employee filed a putative collective action against Sun Holdings, LLC, a fast food franchisee.  The employee, a busboy at a Golden Corral restaurant, alleged that his managers required him to work under his real name and an alter ego to avoid paying him for all hours worked.  This set-up allegedly was designed to avoid having to pay overtime compensation under the FLSA and to count him as a full-time employee eligible to receive health benefits under the ACA.   

Accurate calculation and recording of the total number of hours worked by an employee is essential to compliance with the provisions of both the FLSA and the ACA.  Under the FLSA, an employer must pay an employee at least the minimum wage for all hours worked.  An employer must also provide overtime compensation at one and a half times the employee’s regular rate of pay for any hours worked in excess of 40 hours per week, unless that employee is classified as exempt.  Therefore, if an employer attributes some amount of time worked by one employee to an alter ego through which the employee cannot claim his time, the employee may be deprived of the overtime compensation he has earned.

Additionally, the ACA only provides benefits to employees who reach a certain amount of hours and binds employers with a certain amount of employees meeting that hour threshold.  The ACA applies to employers with 50 or more employees working 30 or more hours per week.  Only those employees working 30 hours or more per week are entitled to the health care coverage required by the ACA.  Therefore, an employee may lose the benefits to which he would otherwise be entitled if a portion of his hours worked is attributed to someone else, causing him to fall below the 30-hour minimum.  Furthermore, an employer may avoid the obligations of the ACA if it records 30 hours or more of work time for less than 50 of its employees. Although the Employer Mandate, which puts the employer-provided coverage into effect, does not kick in for large employers until January 1, 2015, applicability of the ACA depends upon the size of the affected workforce during the prior calendar year.      

A claim of this kind could be very costly for an employer because, as is the case here, such claims are often brought as collective actions.  In this case, the employee filed his claim on behalf of himself and all others similarly situated.  Although the amount of unpaid wages and liquidated damages he seeks only amounts to approximately $15,000.00, the franchisee owns roughly 400 restaurants in Texas and Florida.  Thus, a court award, or even a settlement, could be quite significant.

These allegations demonstrate the importance of correctly tracking employee hours and ensuring that an employee receives compensation and benefits in accordance with the total amount of hours worked.  Often times, this may mean training your managers as to the correct protocol for recording and compensating hours worked and monitoring to ensure managers are following that protocol. 

Importantly, this case forecasts what could be an emerging and growing area of litigation under the ACA, so employers must be ever vigilant about putting into practice protocols that ensure they are complying with the ACA and not manipulating hours to avoid the Employer Mandate’s requirements.  Considering that an analysis under the Employer Mandate’s look-back methodologies should be done this year, any changes to employees’ hours should be closely reviewed with legal counsel.  Although overtime compensation and benefits coverage can create increased financial burdens on employers, the cost of not complying can be even greater. 


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By:  Kara M. Maciel

The following is a selection from the Firm’s October Take 5 Views You Can Use which discusses recent developments in wage hour law affecting the hospitality industry.

IRS Will Begin Taxing a Restaurant’s Automatic Gratuities as Service Charges

Many restaurants include automatic gratuities on the checks of guests with large parties

On September 18, 2013, our hospitality practice attorneys, Kara Maciel and Mark Trapp, have the pleasure of speaking at the Lodging Conference in Scottsdale, Arizona on key financial and legal issues under the Americans with Disabilities Act impacting hotel owners and managers when acquiring, selling, developing or managing properties. 

Under the 2010 ADA Standards, which

By Michael Kun

We have written previously in this blog about California’s obscure “suitable seating” law, which requires that some employers provide “suitable seating” to some employees.

In short, the plaintiffs’ bar recently discovered a provision buried in California’s Wage Orders requiring employers to provide “suitable seating” to employees when the nature of their jobs